Please ensure Javascript is enabled for purposes of website accessibility

Jefferies Analyst Still Sees Over 30% More Upside for DraftKings

By Howard Smith – Jun 23, 2020 at 12:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The share price of the online sports betting company has already more than doubled since its April IPO.

Online sports gaming company DraftKings (DKNG 9.42%) has only been a public company since April 17, 2020, and little sports has been going on since that time. Yet the share price has more than doubled off its approximately $17 offering price. 

Now Jefferies analyst David Katz has initiated the company as a buy recommendation, with a price target of $55, representing 38% upside from today's opening price. The analyst says the company is in the "best position to capitalize" on digital sports gambling in the U.S. Katz believes that online sports gambling is in the beginning stages of growth that will lead to a $19 billion market in the next three to five years. 

laptop and phone showing sports betting app

Image source: Getty Images.

DraftKings CEO Jason Robins has said that his "No. 1 focus from a product perspective" is in-game betting. He believes gamblers in the U.S. will be attracted more to these "prop bets" that rely on specific, in-game events that aren't necessarily related to the outcome. Currently, Robins says that 75% of revenue at sports books in the U.K. come from in-game bets.

The potential popularity in the U.S. was on display during May's "The Match" golf tournament with Tom Brady, Tiger Woods, Peyton Manning, and Phil Mickelson, as gamblers bet on aspects of every hole. Katz thinks that the popularity in other markets "suggest that it could be larger than expected," in the U.S. 

DraftKings is also expanding, as it recently announced it was moving into Michigan with a partnership with Bay Mills Resort and Casinos, to bring sports books to their regional casinos in the state. As sports return in one form or another, it seems that DraftKings has put itself in a good position to reap benefits from the pent up interest.

 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

DraftKings Inc. Stock Quote
DraftKings Inc.
DKNG
$16.85 (9.42%) $1.45

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
331%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.